Figma’s Successful IPO Under Scrutiny by Lina Khan Signals Importance of Merger and Acquisition Oversight

Lina Khan, erstwhile Chair of the Federal Trade Commission (FTC), expressed her approval for Figma’s triumphant Initial Public Offering (IPO) in a recent post on X. The post linked to an article highlighting Figma’s impressive debut on the stock market and posited that the IPO served as a poignant reminder of the significant value generated when startups are allowed to mature into self-sustaining entities, rather than being absorbed by established conglomerates.

Khan’s remarks allude to a $20 billion acquisition proposal by Adobe, which fell through in 2023, ostensibly due to the European Commission and the U.K. Competition and Markets Authority’s lack of approval, as well as regulatory concerns in the United States regarding potential impediments to Figma’s competition with Adobe.

At the time, Khan spearheaded the FTC’s efforts to challenge Big Tech on various fronts, including startup acquisitions. This led to a trend among companies seeking to evade FTC scrutiny through “reverse acqui-hires,” a practice where they would hire key personnel and license technology instead of outright acquisition of startups. Despite Khan’s departure from the FTC, this practice appears to persist.

Although her assertive stance elicited criticism from certain sectors of the tech industry, Khan justified her approach by arguing that only a minuscule proportion of deals warranted further examination. She maintained that founders would ultimately benefit from a landscape where they could engage with several potential suitors rather than being limited to one or two.

Upon her resignation at the onset of the second Trump administration, Khan has since framed Figma’s success as a testament to her approach, referring to the IPO as “a victory for employees, investors, innovation, and the public.”

However, critics argue that Figma’s success can be attributed more to its own innovative growth rather than regulatory scrutiny. For instance, Dan Ives of Wedbush Security told Business Insider, “Figma is a monumental success, but it’s not due to the FTC and Khan.”